I had a commenter, "Mayberry", on my last post tell me:
"You're not a "doomer"? You should be. The Ponzi scheme is collapsing."
The question is: WHEN?
To which I would answer: Right about NOW.
No, not exactly "now", or precisely "now", or sorta "now". The unwind is going on right now, even as we "debate".
What we SHOULD debate, what is WORTH debating... are the "unintended consequences", or in this case as the event itself is unwelcome and unintended perhaps just the plain consequences or outcomes.
(Remember that even if the financial system unwinds or contracts terribly (I think a foregone conclusion) that does not change by one single molecule the amount of the many resources these financial instruments were merely MARKERS for. It then follows that for some there will a great parting of the ways with their "assets", while for others opportunities to move up the food chain will crop up, even if overall society becomes less wealthy.)
Warren Buffet's partner of many decades, Charlie Munger (himself the quintessential curmudgeon) has been informing anybody who would listen that "The Death of Capitalism" is at hand for America. He is probably correct, as he defines "capitalism". (To my mind we have had two versions of "capitalism" here in America... large Corporate crony socialist/fascism and small business REAL capitalism. I must confess and disclose my politics: As a Republican/Conservative/Libertarian I view large corporations as the f*&^^%ing Anti-Christ, and small business as the last noble vestige of what was once, and I really think (or hope) will be once again, America. The Left controls and is fed and nurtured by Corporate America, the Right and Libertarians are fed and nurtured by small biz. This is not to say that the Dems and Repubs are not one big, disgusting incestuous family - they are - but the Left and Right are most certainly not, and that the money trail "doth proclaim" the previous assertion. And why shouldn't it be so? It was Corporate America's ability to withhold payroll taxes that funded the sinking ship that is the U.S. Government. As I have posted a zillion times before: The Left as we knew them are dead, and so is the Right. These groups will morph, IMHO, into Fascists and Libertarians - and, Lord, do I hope the Libertarians win.)
Crony Capitalism IS failing (if this were not true, what's up with the bailouts?). Many folks are going to get killed in the crossfire that will ensue. I always look at this through the eyes of a "little guy" - best thing I can do for all involved is not be one of the victims. As "Coal Guy" recently commented: "When this is all over, the houses will still be there and the people will live in them." How very, very poignant. This certainly will be the case - but the system of money creation based on lending against these "assets" as collateral? I rather think not.
Sooooooo..... what does the economy look like in this "brave new world"? Good f*&^%ing question! If we knew with any degree of certainty, we would not have to waste a moment's breath debating it, now would we? Hence the need for contingency planning, and hence the response in the "market place" (i.e., Costco selling emergency supplies... and I am not saying that it is the right response, or the right stuff, or the right whatever... only that the market is responding and that is a good thing). This is why I do not describe myself as a "Doomer". I fully intend to study and interpret my environment, and do it better than my competitors, in order to profit for myself and my partners. If I thought it was the end of the world... why would I bother? The real answer is that I do not believe that all of this is the end of the world FOR ME AND MINE, but I do think a great many people will skirt awfully close to the bleeding edge of the end. That's what happens when government "social programs" fail because of silly promises that simply cannot be kept. Does any rational person really think we would be in the mess we are in if it weren't for the fact that too many people have become utterly and hopelessly dependent on the Government for food, shelter, clothing (otherwise known as money) and with it a military budget large enough to enforce US$ hegemony in order to FUND THOSE *&^%^&!! programs!? And why is it that so many on the Left do not see that the military budget is there to do this for YOUR PROGRAMS?! Did any of these programs end the human misery they claimed they were going to do? NAFC. They did, however, blow a new "bubble" that now must be popped. Not all "bubbles" are asset "bubbles".